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Editor’s note: the story goes on (if you go to the link) to talk about the impact health care costs are having in keeping people in the workforce longer.

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According to findings from the 2009 EBRI/MGA Consumer Engagement in Health Care Survey, the labor-force participation rate is increasing for those age 55 and older. The percentage of civilian non-institutionalized Americans age 55 or older who were in the labor force declined from 34.6 percent 1975 to 29.4 percent in 1993. However, since 1993, the labor-force participation rate has steadily increased, reaching 39.4 percent in 2008—the highest level over the 1975–2008 period. For those ages 55–64 (the near elderly), this is being driven almost exclusively by the increase of women in the work force; the male participation rate is flat to declining. However, among those age 65 and older (the elderly), labor-force participation is increasing for both males and females. Education is a strong factor in an individual’s participation in the labor force at older ages: Individuals with higher levels of education are significantly more likely to be in the labor force than those with lower levels of education.

With Washington placing insurers in their cross-hairs and proclaiming that there isn’t enough competition among insurers, I wonder if the public has thought about what more competition among health insurers might mean.

First, a few facts. The portion of the premium that is devoted to care (otherwise known as MLR or Medical Loss Ratio) runs between 78 and 82% of premium. You can find these numbers in the quarterly financial reports of the public insurers. These claims payments are a result of contracted reimbursement rates between the insurer and providers (doctors, hospitals, labs, etc.)

Back to the original question. Will more competition drive premium costs downward. If market power in terms of volume allows you to negotiate a better rate then on at least 78% of the bill the costs may go up instead of down with new entrants into the market. The insurers will not be able to negotiate the same favorable terms with providers as they are now. Unless you think they are keeping reimbursements artificially high … I doubt you could find a physician or a hospital that would agree with that.

Therefore the government must be counting on the reduction of the remaining 18-22% to not only be reduced, but to overcome any loss of market power on the contracting with providers. Since the insurers will be smaller, they will have less market power with all of their other providers of products and services as well — from phones, to facilities, and on an on.

Perhaps in this context competition isn’t such a good idea if your goal is to reduce costs.

Then again, perhaps what they are talking about at the Federal level is all of the costly mandates that the states put on insurance providers. Requirements for coverage types, lengths of stay and so on. So maybe the issue isn’t with private enterprise, but rather with government regulation.

What do you think a couple of thousand page health care bill is going to do to the volume of regulation?

Editor’s note: It is critically important that we move the reimbursement system from fee for services to fee for care. A movement in that direction is bundled services, but it has to be more than that. Payment has to involve information about efficient process, quality, and outcomes. Otherwise in the words of Demming, “If you only focus on the ends, you may get it in ways you never intended.”

The health care debate is essentially about access and cost. The bills also include a significant language on quality. The quality agenda is highlighted by funding for the National Quality Forum and Health Information Technology. (ARRA also contains significant funding for Information Technology and the structures to support it.)

This post is about change and cost. There can be little doubt that there are significant issues for the uninsured, those that lose coverage between employers, pre-existing condition exclusions, those that can’t afford to pay for their coverage and other related issues. It is also true that we already pay a significant amount in our current premiums for indigent care. The question is, how much care can we afford for those not paying their own way.

That number is somewhere between ‘0’ and ‘100%’. It isn’t 100% since you need productive workers paying taxes to pay for the care of others unable to afford their own care. It is certainly more than ‘0’. Is it 10%, 20%, more?

Second, subject … liberalism vs. conservatism. The original definition of each goes something like this:

Liberals believe that where change is necessary, it should be done quickly. Conservatives believe that things should be changed incrementally to understand the impacts of the changes. If a liberal where in a room which quickly went dark they would be heard to say, ‘lets’ get the heck out of here.’ A conservative would methodically find their way out of the room.

So, how do these two subjects come together? Simply this, the debate currently underway is a ideological one. Should we go quickly or should we go incrementally and how much is affordable. If you can effectively answer those two questions …

All primary care doctors in Denmark use electronic medical records and 98 percent have the ability to electronically manage patient care—including ordering prescriptions, drafting notes about patient visits, and sending appointment reminders. In addition, almost all medical communication between primary care doctors, specialists, and hospitals is electronic, according to a new Commonwealth Fund profile of the Danish health care system. Ramping up the use of health information technology (HIT) tools like electronic medical records (EMRs) in the United States, where currently only 46 percent of physicians use EMRs, is an important part of the recent stimulus bill and the health care reform currently being debated on Capitol Hill. According to Denis Protti and Ib Johansen, authors of the report, much could be learned from the Danish system, where HIT use among primary care doctors soared from 15 percent in the early 1990s to more than 90 percent by the year 2000. “Denmark continues to work vigorously toward an efficient, patient-centered health care system and has strategically employed health information technology to help achieve that goal,” said Commonwealth Fund President Karen Davis. “The Commonwealth Fund’s international health care surveys have consistently shown us that the United States lags behind when it comes to health information technology. However, the promotion of health information technology in the recent stimulus bill and current health reform bills are an encouraging sign. These efforts, combined with some of the best ideas from Denmark’s success—a coherent national policy, financial incentives to adopt technologies, and technical support for providers—could go a long way toward moving this country to a high performance health care system.”

Editor’s note: What requires new laws? What requires regulatory intervention? And what will not yield regardless?

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Estimated range of healthcare system waste is $600-$850 billion annually

At President Obama’s Healthcare Summit, SEN. Tom Coburn cited Thomson Reuters’ white paper “Where Can $700 Billion In Waste Be Cut Annually From the U.S. Healthcare System?” The report identifies the most significant drivers of wasteful healthcare spending as follows:

From 1996 to 2006,the hospital discharge rate for total hip replacement increased by one-third, and the discharge rate for knee replacement increased by 70%.

In 2006, total hip replacement rates were similar among men (18.1 discharges per 10,000 population) and women (20.5) . Discharges for partial hip procedures were about twice as common among women
(23.9 per 10,000 for age 45 years and over) as men (13.0 per 10,000). Partial hip procedures, which are often used to treat fractures, were also more common among older persons.

In 2006, knee replacement discharges were more common among women 45 years of age and over (54.0 per 10,000) than men (34.9). As with hip replacement procedures, knee replacement discharges were more than three times as high for those 65 years of age and over (84.1), compared with those 45–64 years of age (25.7).

Editor’s note: There appear to be no fail safe mechanisms in the new bill, in the event that the cost projections turn out to be wrong and it costs more. Even if there are fail-safe triggers, will a future Congress have the will to allow them to be triggered? See physician reimbursement under SGR (Sustainable Growth Rate) over the past 12 years. Does the phrase, “Not on My Watch” come to mind?

This from the NY Times:

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But even some lawmakers who voted for the Senate bill have been calling in recent weeks for additional steps to be taken to guarantee that new spending will not spiral out of control. They also want to ensure that Congress will follow through on proposed cuts, especially reductions to slow the growth of Medicare.

Many experts have warned that members Congress may not have the stomach to carry out the proposed cuts in the future. In January, five Democratic senators, including Michael Bennet of Colorado and Mark Warner of Virginia, sent a letter to the Senate majority leader, Harry Reid of Nevada, urging him to include a “fail-safe” mechanism in the final bill that would result in cuts if spending were to exceed estimates.

Representative Chet Edwards, Democrat of Texas, noted the absence of such a fail-safe when he voted against the House bill in November.

“I am especially disappointed that the bill does not have a fiscal trigger in it to cut spending if actual costs of new programs turn out to be higher than projected,” Mr. Edwards said in a statement. “While the Congressional Budget Office predicts this bill is paid for over 10 years, there is no mechanism in the bill to force spending cuts if those complicated projections turn out to be wrong.”

So far, there is no indication from the White House or Democratic Congressional leaders that they would include such a mechanism in the legislation. One Senate leadership aide dismissed the idea as a “second tier” issue at a time when officials are focused on how they can make final changes to the core components of the health care legislation through the budget reconciliation process.

After the health care summit meeting last week, Mr. Altmire said the legislation still seemed “weak” on cost containment.

Representative Lincoln Davis, Democrat of Tennessee, who voted against the House bill in November, raised similar concerns after the summit meeting last week.

“America has the best health care system in the world, but we need to work on reducing its costs,” Mr. Davis said in a statement. “Folks in my district could care less about the partisan gamesmanship that is being waged by ideologues who are only interested in scoring political points, they want affordable and accessible care, and they want an honest discussion on workable solutions.”

OBAMACARE BETA IS A DUD

In defending his decision to go nuclear (i.e., using reconciliation to pass his unpopular health care bill), President Obama talked Tuesday about insurance company “abuses.” He talked about premium hikes in California. He talked about a sick mom in Wisconsin. He even talked (in extremely modest ways) about Republican ideas like tort reform and fighting Medicare fraud.

What Obama didn’t mention was Massachusetts or bringing the benefits of Bay State reform to all America. Quite simply, he avoided mentioning the Bay State’s attempt at government-run health care because it has been a debacle in Massachusetts, says columnist Michael Graham, of the Boston Herald.

Here are a few “highlights” of the current status of the Obamacare experiment in Massachusetts:

The Bay State’s “universal” health insurance scheme is already $47 million over budget for 2010; “Romneycare,” or “Obamacare Beta” as some are calling it, will cost taxpayers more than $900 million next year alone.

Average premiums are the highest in the nation and rising.

The state also spends 27 percent more on health care services, per capita, than the national average; those costs, contrary to what we were promised, have been going up faster here than nearly everywhere else.

It’s creating bizarre marketplace mutations; in Massachusetts, Obamacare 1.0 is such a mess the governor is talking about imposing draconian price controls.

Gov. Deval Patrick (D) has even suggested going to “capitation,” a system where doctors get a fixed amount of money per patient — and then that’s it; which means it would become in your doctor’s financial interest never to see you again.

All this damage to the taxpayers, the insured and the responsible business owners . . . and for what? The percentage of uninsured Bay State residents has gone from around 6 percent to around 3 percent. In other words, it’s a dud, says Graham.

The damage Obamacare would do to the current health care system — where 85 percent of Americans are happy with their health care, by the way — could be so great, the only institution big enough to repair it would be the government. The fact that the government inflicted that damage would be a moot point, says Graham.